momagri, movement for a world agricultural organization, is a think tank chaired by Christian Pèes.It brings together, managers from the agricultural world and important people from external perspectives, such as health, development, strategy and defense. Its objective is to promote regulationof agricultural markets by creating new evaluation tools, such as economic models and indicators,and by drawing up proposals for an agricultural and international food policy.

Russia/Lithuania: The milk of discontentment

October 21, 2013

On October 7, Russia imposed an embargo on imports of dairy products from Lithuania. The European Commission moved swiftly and announced it was considering filing a complaint with the World Trade Organization (WTO), thus hoping to resolve the issue.

In the formal announcement of the suspension, Rosselkhoznadzor––the Russian veterinary and plant health control agency––cited increasing sanitary concerns regarding Lithuanian dairy products. While health reasons might have legitimately led Russia to halt some imports from Lithuania, the European authorities are suspecting the actual motives to be political. Moreover, since the disintegration of the former Soviet Union, Lithuania has taken the lead among the former Soviet republics in gaining more freedom from Russian influence. And to make matters even worse, Lithuania currently holds the European Union presidency. In fact, on November 28 and 29, Vilnius will host the EU Eastern Partnership Summit designed to draw six other ex-Soviet states (Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine) closer to Brussels, and to sign agreements and free trade accords between the EU, Ukraine, Moldova and Georgia. Such closer relations are seen by Moscow as tampering with its sphere of influence.

Beyond the political nature of the sanction imposed by the Kremlin, and should the embargo amplify and affect other European nations, this unilateral and uncoordinated decision could have destabilizing consequences on trade––such as sharp distortion of international prices and price hyper-volatility––that would be all the more brutal, since Russia is a key economic power that weighs on international trade. History could thus repeat itself: Through the sole announcement of a grain embargo, Moscow disturbed international markets, leading to the soaring prices recorded following the 2010 summer.

The Russian decision not only weakens the shaky political balance between Moscow and Brussels, but also casts a further shadow on an economic sector that is already structurally unstable. Yet, now more than ever, global agricultural markets are requiring the implementation of pertinent governance and regulatory principles. All the more so since the collective behavior faced with inherent risks and threats is aggravated in a context of increased dismantling of regulatory and intervention mechanisms.